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“On-demand” litigation heats up this summer

This blog recently reported on the first wave of lawsuits challenging the classification of independent contractors in the “on-demand” economy. The second wave has now arrived, as numerous tech companies have been hit with class or collective action lawsuits alleging misclassification of their workers, most filed by the same plaintiffs’ attorney who avoided summary judgment against Uber and Lyft earlier this year.

The rundown:

Washio, an on-demand laundry service, was sued in San Francisco federal court by a driver alleging California state law wage violations;

A group of bike and vehicle couriers for Shyp, a package delivery company, brought a claim for arbitration alleging California state law wage violations;

Handy, a cleaning and “handyman” service provider, was sued in Massachusetts federal court by a Boston-area cleaner who alleges violations of the FLSA and Massachusetts wage laws;

Postmates, a general delivery service, was sued by a group of foot, bicycle, and vehicle couriers in San Francisco federal court alleging violations of the FLSA, as well as California, New York, and Massachusetts wage laws; and

Lyft is immersed in litigation on two fronts, as a former driver just filed a class and collective lawsuit in Florida federal court alleging violations of the FLSA and Florida law.

These legal actions come on the heels of an eye-opening decision by the California Labor Commissioner, who ruled in June that a former Uber driver was an employee, not an independent contractor. This decision, which is not binding on any court and applies only to a single employee (and is subject to appeal), still created shockwaves and has led to widespread speculation about a similar ruling in the class-action lawsuits pending against Uber and Lyft in federal court. (Uber is opposing class certification in its litigation and on July 9 submitted statements from over 400 drivers.)

Meanwhile, the U.S. Department of Labor, fresh off its proposed amendments to the FLSA’s “white collar” exemptions, has indicated that it will issue guidance regarding the independent contractor classification. This guidance will come sometime this summer in the form of an “Administrator’s Interpretation,” according to David Weil, head of the DOL’s Wage and Hour Division. While we can’t predict the exact content, we anticipate that the AI will tighten the requirements of the independent contractor classification, which would be consistent with the DOL’s aggressive enforcement in this area.

These developments are critical if you’re an on-demand business, or are thinking of rolling out on-demand services. If you utilize independent contractors, it is imperative to properly evaluate the service relationship to ensure compliance with the law.